Not the original poster, but hopefully still helps: I chopped the peppers very roughly. Essentially, I made sure that the liquid could reach the insides easily. For small peppers, I just halved them. For the larger ones, I took out the seeds. But I didn't do it perfectly. Some people say the seeds will make the sauce bitter. I didn't have that problem.

I have used a wild mix of peppers. A friends sent some from his garden, we had some on our plants, so we just threw them all together. I only used yellow, orange, and red in the batch, because I didn't want puke-colored hot sauce but technically, the color doesn't matter. I've used cayenne, habanero, elephant, thai, lila luzy, and another one I don't remember the name of. For a milder sauce, you can also add some non-spicy bell peppers.

You should have at least 1/2 of them fresh but can add dried ones to bulk things up. You need some fresh ones to get the fermentation going, though. Definitely, no moldy ones!

It's a lactic acid fermentation. Don't overthink it. There is a shitton of salt in hot sauce that keeps most things in check. The fact that the fermentation happens under brine (i.e. not in air) takes care of the rest. Of course, do your own research, but hot sauce is rather easy. I just clean the jars under hot soapy water, then again to get rid of any and all remnants of soap, and then fill with tap water. But I'm in Europe, so there's no chlorine in the water where I live. You might need to use another kind of water or do some water treatment (chlorine evaporates if you leave the water open somewhere).

After the fermentation, we used a blender to mix it all together with some vinegar. The brine is great for chicken. We didn't filter the final sauce, so ours had some seeds in it. It was great on egg and toast or in cooking. You can filter again at the end to get a smoother, more liquid hot sauce.